The Complete Guide to Secured Business Loans for UK Companies (2026)

What is a secured business loan?

A secured business loan is any business borrowing that is backed by a charge over a property or other high-value asset. The charge gives the lender the right to sell the asset to recover the outstanding debt if the business cannot repay. In exchange for this additional security, lenders typically offer significantly lower interest rates, higher loan amounts, and longer repayment terms than unsecured alternatives.

The property used as security can be commercial (offices, retail units, warehouses, factories) or residential (including the director's own home, a buy-to-let property, or other residential investment). Some lenders will accept both types. The key requirement is that the property has sufficient equity above any existing charges to support the new loan.

Secured business loans are a broad category that includes commercial mortgages (for purchasing or refinancing business premises), development finance (for property projects), business loans secured against a director's home, and second charge loans (where the security property already has an existing mortgage). Each has its own lender set, terms, and pricing.

First and second charge lending

A first charge loan is the primary (and only) charge on the property. If you own a property outright or are purchasing one with the loan proceeds, the lender takes a first charge. First charge lenders have priority over all other creditors in the event of a repossession and sale, which means they offer the lowest rates as their risk is minimised.

A second charge loan sits behind an existing first charge (usually a mortgage). The second charge lender takes on more risk because they are only repaid after the first charge holder in a repossession scenario. Rates for second charge lending are therefore higher than first charge, but second charge loans are extremely useful where you want to raise additional funds against property without disturbing a favourable first charge mortgage.

Second charge business loans are particularly popular for directors who want to raise capital against their family home without remortgaging. This avoids losing a competitive existing mortgage rate and keeps the two facilities separate for accounting and compliance purposes.

Loan-to-value (LTV): what it means and how it affects your deal

Loan-to-value (LTV) is the ratio of the loan amount to the property's current market value. Most secured business lenders will advance up to 70-75% LTV on a first charge basis for commercial property, and up to 75-80% LTV for residential property security. Higher LTV lending is available from specialist lenders but typically attracts significantly higher rates.

The equity you hold in the security property directly determines how much you can borrow and at what rate. A property worth £600,000 with no existing charges could support a first charge loan of up to £420,000-£450,000 at standard LTV criteria. The same property with an existing first charge mortgage of £200,000 could support a second charge loan of up to £220,000-£250,000.

LTV is calculated on the current market valuation, not the purchase price or the value you believe the property is worth. An independent RICS valuation, commissioned by the lender at your cost, is required for most secured business lending transactions above a minimum threshold (usually around £75,000).

Rates, terms and the true cost of secured borrowing

Secured business loan rates in 2026 typically range from Bank of England base rate plus 2.5% to base rate plus 6%, depending on LTV, property type, borrower profile, and loan purpose. At current base rate levels, this translates to rates from approximately 7.25% to 11% APR for most transactions. Development finance and higher-LTV second charge lending can be priced higher.

Terms range from one year for short-term secured lending to 25 years for commercial mortgages. Longer terms reduce monthly repayments but increase total interest paid significantly. A £500,000 commercial mortgage at 8% APR over 15 years costs approximately £175,000 in total interest; the same loan over 25 years costs approximately £308,000. Model the total cost, not just the monthly payment.

Secured lending has higher associated costs than unsecured: valuation fees (£500-£3,000+ depending on property size and type), legal fees for both your solicitors and the lender's (often £3,000-£8,000 combined), and arrangement fees of 1-2% of the loan amount. For large transactions these costs are proportionally small, but for smaller secured loans they can represent a significant percentage of the facility.

How long does a secured business loan take to complete?

Secured business lending is slower than unsecured lending because of the legal and valuation work required. For a straightforward second charge loan on a residential property, completion times of two to four weeks are achievable. For a commercial mortgage or development finance facility with multiple properties and complex legal structures, allow six to twelve weeks.

The most common causes of delay are: slow valuation turnaround (particularly for specialist commercial properties in less liquid markets), solicitor delays on either side, and incomplete application documents. Instructing specialist solicitors experienced in commercial property lending and using an experienced broker who manages the process actively makes a significant difference to completion timescales.